Please ensure Javascript is enabled for purposes of website accessibility

Why Relypsa, Inc. Shares Skyrocketed 67% Today

By Todd Campbell - Apr 7, 2016 at 6:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A return of M&A rumors ignited a flurry of buying in the company.


What: Swirling rumors that an acquirer might step up to buy the company caused shares in Relypsa, (RLYP) to soar 67.6% higher today.

So what: The company has been the subject of M&A chatter ever since AstraZeneca plc (AZN 0.36%) forked over $2.7 billion to buy competitor ZS Pharma last year.

Relypsa markets Veltassa, a drug for the treatment of high potassium levels in the blood, or hyperkalemia. The FDA approved Veltassa last October to high expectations that stem from the fact that up to 3 million Americans with chronic kidney disease or heart failure could benefit from this therapy. Hyperkalemia can cause abnormal heart rhythms, and in some instances, can result in death.

Prior to Veltassa's approval, treatment options consisted mostly of methods that reduce potassium intake and boost potassium excretion. However, dietary restrictions can be tough to adhere to, and current methods that boost excretion lead to high patient-discontinuation rates.

The combination of those factors prompted AstraZeneca to pony up big money to buy ZS Pharma, a company with a late-stage hyperkalemia drug of its own. The FDA is set to issue its decision on ZS Pharma's hyperkalemia drug on May 26.

Now what: Investors are hoping that a similarly attractive valuation could be given by an acquirer to Relypsa, but there's a big "who knows" component to this story. That's because Veltassa's approval includes a black-box label that warns of Veltassa binding to other drugs that are taken orally.

The label recommends that patients avoid taking other drugs orally within six hours of taking Veltassa. If AstraZeneca's competing hyperkalemia drug gets approved with a less-restrictive label than Veltassa, it could become the gold standard. Given that backdrop, acquirers may exercise some caution, at least until the end of May when they'll know how the label reads.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AstraZeneca PLC Stock Quote
AstraZeneca PLC
$66.65 (0.36%) $0.24
Relypsa, Inc. Stock Quote
Relypsa, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/25/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.